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Elder Financial Abuse on The Rise – Tips to Prevent It

December 28, 2018

Estimates have the amount of money lost by seniors as a result of fraud and other forms of elder financial abuse at around $30 billion a year. Elder abuse fraud continues to increase, affecting approximately 1 in 18 older Americans each year, although experts say the numbers might be higher since many senior victims are reluctant to report or share details of the crime with their families or authorities.

Often the victims are individuals who lost a spouse who has historically handled all of the finances throughout the marriage.

Most Common Forms of Elder Financial Abuse Fraud
According to the North American Securities Administrative Association (NASAA), the most common occurrences of fraud against the elderly are committed by outside third-parties, although elder financial abuse takes on many forms as shown in the chart below.

Elder financial fraud cases

Issue

Percentage of cases reported

Third-party abuse/exploitation

27%

Account distributions

26%

Family member, trustee or power of attorney taking advantage

23%

Diminished capacity

12%

Combined diminished capacity and third-party abuse

12%

Fraud

6.30%

Elder exploitation

5.70%

Friend, housekeeper or caretaker taking advantage

<1%

Excessive withdrawals

<1%

SOURCE: North American Securities Administrators Association

Senior Safe Act
On May 24, 2018 the Senior Safe Act was signed into federal law by President Trump after passing both the House of Representatives and the Senate with broad bi-partisan support. This new federal law promises immunity to encourage banks, and other financial institutions when making reports of suspected financial exploitation against older clients. The driving force behind the law is the realization that financial advisors, brokers and bankers are often the first to witness clients making untypical withdrawals of money or other unusual activities.

Ways to Help Prevent Elder Financial Abuse
Of course, government regulations shouldn’t be the only defense against elder financial abuse. There are other steps that you can take now to help reduce the risk.

Plan for the Future Today
When a person is still mentally sharp, help him or her make a plan that designates power of attorney and health care directives.

Know the Caregiver
Take the time to get to know the person who is your loved one’s primary caregiver. Building a relationship with the caregiver will let them know you are paying attention to what is going on in your loved one’s life.

Make Use of Outside Resources
Sign up for a service to track financial activity and notify an advocate of unusual withdrawals or spending.

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